Santander customers ditched bank as 1|2|3 rate cut took hold

Santander attracted hundreds of thousands of savers with its current account offering but figures show users switched out following interest rate cuts.

During the last three years Santander has often outperformed rivals, seeing a net influx of more than 454,000 switchers from 2014 to 2016, well above Halifax (371,400) and Nationwide Building Society ( 194,700).

But the latest Current Account Switch Guarantee statistics covering the last three months of 2016 reveal Santander saw a net loss of customers for the first time in three years. It saw 21,142 customers come on board while 28,464 voted with their feet.

Andrew Hagger of Moneycomms said it’s highly likely this sudden change of direction in the switching market is down to Santander’s revised tariff which was announced in August but came into effect in November 2016.

He said: “These changes meant customers with balances of £3,000 to £20,000, who were previously earning a generous 3% on their credit balances, saw their rate slashed to just 1.50%.

“This is a marked change from the days when Santander was adding approximately 65,000 net new customers per quarter in early 2015.

“The bank had already increased the monthly fee on its flagship 1|2|3 current account from £2 to £5 in January 2016 but this in itself didn’t seem to impact the popularity of the account. However, the subsequent changes in November 2016 appear to have been the final straw for some.”

Hagger added: “It’s good to see that a decent number of customers are prepared to up sticks and move their custom elsewhere rather than stay put and simply accept savage cuts to their current account deal.”

The data reveals that Nationwide saw the largest influx to its customer base with a net inflow of 30,510 (8,565 left), while Halifax had a net gain of 14,117 (losing 26,752 customers) in the three month period.

HSBC Bank saw the largest number of customers leave the group (28,956), closely followed by Santander (28,464) but the provider with the largest net loss was Barclays Bank. It gained 6,308 customers, but saw 23,087 leave.

The below table gives a full breakdown:

Switching data

Since the launch of the Current Account Switch Service (seven day switching) in 2013, the total number of switches now stands at 3.98 million.

In the last 12 months (1 July to 30 June 2017), there were 909,186 switches, with 218,138 taking place in the second quarter of 2017.

Bacs reports that the number of switches is expected to surpass four million by the end of July and it notes that 99.5% have been completed within the seven-day timescale.